Korean Air partners with IBM and Hanjin to outsource $210 million in services

Korean Air and IBM today announced a 10-year, $120 million outsourcing contract to shift the airline’s international IT networks to newer Internet-based technologies to increase efficiency and improve customer service.

The airline also announced that it has signed a 10-year, $90 million contract to outsource the networking for its domestic Korean offices with Hanjin Information System Technology.

Both contracts are designed to give Korean Air more flexibility to focus on its core competency, the operation of one of the world’s leading airlines.

IBM will design and implement a network that will serve more than 90 Korean Air offices worldwide, allowing Korean Air to be able to deploy new applications more quickly throughout its worldwide system. Hanjin will develop a network that serves more than 35 offices throughout Korea and will interface with the IBM network.

"This network outsourcing lets us concentrate on our core competencies in critical business processes while using cutting edge technology," said Korean Air’s Chairman and CEO, Y.H. Cho. “Establishing a wide global network is essential for Korean Air. This will improve our market presence as a world airline leader and let us more actively address the fierce competition in the global marketplace."

Through new technology, Korean Air will continue its transformation into an "On Demand" business, Cho said, allowing the airline to respond more quickly to market fluctuations. He said that this would reduce costs in the long term and increase customer satisfaction, as new services are created more rapidly to respond to market demands.

IBM and Korean Air first entered into a strategic outsourcing alliance in 1998 to operate the airline's Korean data center. Cho said the airline will increase efficiencies by extending this alliance to the management and operation of its global network.

Korean Air will continue to run its in-house IT department to continue to develop new programs that require knowledge of airline industry such as reservation systems, cargo management system.